The Last Word Comment
Small business confidence hits its highest level since 2015
SMEs are starting to invest again, despite pressure on staffing and a degree of continued political uncertainty
Edward Winterton UK chief executive, Bibby Financial Services
Confidence among the UK’s smallest companies has rebounded to 2015 levels, according to or latest SME Confidence Tracker. The number of SMEs expecting sales to increase between April and June jumped by 13%, with half (50%) expecting to see an increase, when compared with expectations for the first three months of the year. The overall confidence index rose by six
basis points from 58 in the fourth quarter of 2017 to 64 in the first quarter of 2018. It is the highest reading since the second quarter of 2015 when The European Union Referendum Bill was first unveiled in the Queen's Speech.
Limited clarity It is clear that even limited clarity over Brexit – and some compromise on behalf of both the UK and the EU following recent negotiations – has had a calming effect on SMEs. This has resulted in a marked increase in
confidence, which is long overdue following two years of tumbling confidence and subdued investment. Despite rising confidence, more than two-fifths of SMEs (43%) say that the
uncertain economic environment in the UK and further questions surrounding Brexit are holding back investment over the months ahead. Over a third (36%) of business owners
would back calls for Britain to remain in the Single Market and Customs Union, despite the government’s pledge to leave both. With the near record-low levels of
unemployment, over a quarter (27%) of SMEs are struggling to hire skilled workers, and 23% say they have had to increase
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While it is positive to see confidence return to the backbone of the economy, there are still underlying issues that could impact SMEs’ future investment and recruitment plans
wages to retain existing skills. With many firms reliant on overseas workers, there are concerns that the issue will be compounded when the UK leaves the EU next year.
European Economic Area In a report by the House of Commons Exiting the European Union Select Committee released on 4 April, continued membership of the European Economic Area (EEA) – including some free movement of people – has been proposed should the government’s final Brexit deal not meet 15 key criteria. With just under a year to go before the
UK officially leaves the EU, SMEs are concerned about their ability to hire skilled workers both now and in the future. It is vital that UK PLC has clarity on this
important issue sooner rather than later to enable investment to start to flow more freely again. While it is positive to see confidence
return to the backbone of the economy, there are still underlying issues that could impact SMEs’ future investment and recruitment plans. The real learning here is how far a little
Brexit progress can go in relation to small business confidence. Whatever comes of the future Brexit
negotiations, for now at least, it seems that SMEs are getting on with business, regardless. Over the next three months, more than
two fifths (41%) of SMEs are planning to invest in training and developing existing staff, while a quarter (24%) are planning to bring in new talent. Just under a third (30%) are planning to upgrade their digital technology. CCR
May 2018
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